Supreme Court Appears Conflicted On Suit Against Pfizer Unit

February 25, 2008:

WASHINGTON -(Dow Jones)- The U.S. Supreme Court Monday appeared divided as to whether it should stop a Michigan product liability lawsuit against Pfizer Inc.’s (PFE) Warner-Lambert unit brought by diabetes patients harmed by Rezulin, a drug the company removed from the market in 2000.

The Michigan case is proceeding under a unique state drug products liability law that favors pharmaceutical companies by generally barring lawsuits over drugs approved for sale by the U.S. Food and Drug Administration. But the law has an exemption that allows injured patients to sue if they allege a drug company committed fraud during the FDA drug review process.

“Who would you rather have make the decision as to whether this drug is on balance going to save people or on balance going to hurt people, an expert agency, on the one hand, or 12 people pulled randomly for a jury role?” Justice Stephen Breyer asked.

The issue of federal preemption of state lawsuits over drugs is narrowly presented in this case, but will be considered more broadly in the fall when the Supreme Court takes up Wyeth’s (WYE) challenge to a $6.8 million judgment awarded to a Vermont woman over complications from an anti-nausea drug.

During oral arguments Monday in the Michigan lawsuit, some justices indicated they were uncomfortable with allowing state-level lawsuits to proceed – through legal discovery and possible jury verdicts that don’t adhere to drug safety protocols – and potentially disrupt the FDA’s ability to review positive and negative factors when approving drugs.

The federal government appeared in support of the company, expressing concerns that lawsuits probing for fraud against the FDA are at odds with federal drug oversight. Representing the patients who sued was Washington, D.C.-based attorney Allison Zieve, who said provisions in the Michigan law don’t raise problems the high court cited in an earlier case that restricted liability lawsuits over drugs.

The lawsuit was brought by individuals who allege they were injured by the diabetes drug. Rezulin was sold from 1997 to 2000 but removed from the market at the FDA’s request amid concern the drug harmed the livers of some patients.

Following the drugs’ removal from the market, lawsuits sprang up across the country and were consolidated in a New York federal court. The Michigan claims were thrown out by a federal trial judge in 2005 because of a state law that limits lawsuits against drug companies, unless they withheld information when the FDA was reviewing the drug.

On appeal, the 2nd U.S. Circuit Court of Appeals in New York revived the suit, saying it believed legal precedent set a high bar for stopping product liability lawsuits against drug makers.

Pfizer, which acquired Warner-Lambert in 2000, announced a fourth-quarter charge against earnings in 2003 to cover all the costs associated with Rezulin litigation.

The case is Warner-Lambert Co. v. Kent, 06-1498. A decision is expected by July.